Judge Allows Circuit City to Pay Former Employees

Richmond, Va. A U.S. Bankruptcy judge on Friday allowed Circuit City Stores Inc. to continue paying nearly 600 employees laid off at its headquarters before it filed for bankruptcy protection.

Circuit City was in court on Friday for hearings related to its Chapter 11 bankruptcy case. The company filed for protection last month as it faced pressure from vendors and consumers who weren't spending. Its Canadian operations also filed for similar protection.

The committee representing the company's unsecured creditors had asked the judge to cease payroll payments and benefits to 588 employees laid off in early November.

The payments would cost the company about $8 million for the 60 days of wages, half of which already has been paid, Gregg Galardi, an attorney for Circuit City, told the judge.

Robert J. Feinstein, an attorney representing the committee, argued that while the committee was sympathetic, it was looking out for the best interest of all constituents.

Circuit City had received initial approval last month to pay the workers through January, but Friday's ruling made that decision final.

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